Dell
Strategic Concepts & Mechanics
Primary Evidence
"A Prediction Today, the combination of record corporate cash levels and generally low interest rates and P/E ratios presents a historic opportunity for aggressive capital allocation. This situation is particularly pronounced among the largest, bluest-chip technology businesses—companies like Cisco, Microsoft, and Dell—many of which are still run by members of their founding management teams, have enormous cash balances, and trade at unprecedented single-digit P/E multiples. I think it’s likely one of these firms will reverse its historic emphasis on R&D investment and move to optimize returns through a combination of dramatically increased buybacks or dividends. Were this to happen, the market’s response would likely be rapturous, and one can imagine Henry Singleton as the CEO of one of these companies, rubbing his hands together in delight at the opportunities."
"Consider the original Apple ad for the Mac that ran during the 1984 Super Bowl—it helped create a cadre of loyalists that have kept the company alive for 20 more years, despite the fact that for years, Apples were slower and more expensive than comparable PCs from Dell, HP, or IBM.96 It is not uncommon to read postings on the Mac Internet forums urging people to buy some accessory or software “to help support Apple.” Similarly, many people drive the 300 mile roundtrip from my home in Atlanta to Birmingham, Alabama, to fly Southwest Airlines, and…"
"In 2020, Foxconn employed nearly [a cool million workers](private://read/01k3jwt46q240aq6fe12mqkyr0/16_Notes.xhtml#_idTextAnchor346) globally. As iPhone production swung into full gear a decade ago in Shenzhen, workers might have seen someone zooming around the campus on a golf cart. That would be Terry Gou, founder of Foxconn (also known as Hon Hai Precision Industry). Gou might start the day by doing laps in the company pool and then drive [his own golf cart](private://read/01k3jwt46q240aq6fe12mqkyr0/16_Notes.xhtml#_idTextAnchor347), specially equipped with a bicycle bell, around the facility until late at night to monitor production. He is legendary in his native Taiwan for his dedication to work. Gou aggressively courted American companies like Dell and Apple to win contracts for manufacturing their products, earning their trust by guarding technical secrets and making products on time, at high quality, in massive volume."
"Even her careful preparation was insufficient, however. Starting when the system went live at the beginning of June and continuing throughout the rest of the month, as many as 20 percent of customer orders for servers stopped dead in their tracks between the legacy order-entry system and the SAP system.36 HP was not the only company selling servers—customers could easily turn to Dell or IBM. So, as backlog piled up, HP started to lose business. In her conference call with analysts HP CEO Carly Fiorina later stated that this snafu resulted in a $160M financial hit. The HP experience perfectly exemplifies not only the high Switching Costs (considerably more than the software itself) an ERP migrator can expect, but also the intimidating uncertainty which surrounds the planning for such a migration."
"Thinking of Apple’s investment like a government program is instructive. Year in, year out, China didn’t have the talent or expertise to build the products that Jony Ive’s studio conceived, but the engineers Apple hired out of MIT, Caltech, and Stanford, or poached from Tesla, Dell, and Motorola, routinely got them up to speed. Apple could send a caliber of talent to China—what one Apple veteran calls “an influx of the smartest of the smart people”—that no government program ever could. And the culture was such that the Apple engineers would work up to eighteen hours a day. Moreover, whereas a government program could at best train a workforce to engineer products, it wouldn’t have the ability to actually purchase the goods. But Apple could and did."
"For Dell, ever focused on efficiency, China’s advantages were all about cost and scale—that is to say, they were about *margin*. But Apple looked at the armies of affordable, available labor and saw a different potential: *unconstrained design*. Or to put it differently: Western PC companies were shifting to China because of what was *available*; Apple shifted because of what was *possible*."
"Thinking of Apple’s investment like a government program is instructive. Year in, year out, China didn’t have the talent or expertise to build the products that Jony Ive’s studio conceived, but the engineers Apple hired out of MIT, Caltech, and Stanford, or poached from Tesla, Dell, and Motorola, routinely got them up to speed. Apple could send a caliber of talent to China—what one Apple veteran calls “an influx of the smartest of the smart people”—that no government program ever could. And the culture was such that the Apple engineers would work up to eighteen hours a day. Moreover, whereas a government program could at best train a workforce to engineer products, it wouldn’t have the ability to actually purchase the goods. But Apple could and did."
"Thinking of Apple’s investment like a government program is instructive. Year in, year out, China didn’t have the talent or expertise to build the products that Jony Ive’s studio conceived, but the engineers Apple hired out of MIT, Caltech, and Stanford, or poached from Tesla, Dell, and Motorola, routinely got them up to speed. Apple could send a caliber of talent to China—what one Apple veteran calls “an influx of the smartest of the smart people”—that no government program ever could. And the culture was such that the Apple engineers would work up to eighteen hours a day. Moreover, whereas a government program could at best train a workforce to engineer products, it wouldn’t have the ability to actually purchase the goods. But Apple could and did."